Three Things I’d Do Differently

Cale Smith

Here are three things I wished I’d done differently when first setting up my Spoke Fund and my firm. This is certainly not an all-inclusive list, but these in particular have come up recently in conversations with prospective Spoke Fund managers.

1. Having a good CRM (customer relationship management) tool on day one.

At the end of 2008, I got an email out of the blue from a reasonably well-known fund manager whom I admired. He’d somehow seen the positive plug I gave his mutual fund company in this slideshow and was basically checking in to say, “thanks and good luck.” I thought it was extremely cool.

It also led to a ten minute phone conversation, during which he asked about the Spoke Fund model, my philosophy, and referred me to someone else he thought I should talk to. Near the end of the call, perhaps sensing he had driven most of the conversation, he wondered if there was anything I wanted to ask him. So I asked, “What’s the single most important piece of advice you’d give to someone just starting a fund?”

I was hoping his answer would make time stop and the seas part – you know, that he would bestow upon me the sort of unfathomable wisdom only available to a salty veteran who managed billions of dollars of other people’s money.

Instead he said this:

“Get yourself the best CRM tool you can find, because you’re going to need it.”

After scratching my head for a bit, I went out, swallowed hard, and spent $1200 on Salesforce.com…and then proceeded to bang my head against the wall for two weeks trying to figure out how to tame it. After that, I quit out of pure frustration, and really soured on all CRM tools in general, for about a year. Nothing I couldn’t do myself a lot cheaper with a spreadsheet and Post-it notes, I figured. Never mind what that grizzled old-timer had told me.

And the truth is that I really didn’t need a CRM tool that first year to help land my early investors. They were going to invest, regardless. But that circle only gets you so far, and I blew some chances early on to expand my early investor base outside that friends-and-family group because I had too much going on and no good way to track leads. Now, in year three, and having just spent a sporadic three months working on and off with my VA to finally get my CRM program updated and really making it an asset, I am kicking myself for not having that tool up and running earlier. Like, much earlier…meaning on day one, just like the man had said.

I have blown a not-insignificant amount of business by not being better organized about responding to leads and prospects, period. And that wasn’t really obvious until I’d looked back. If I’d had a really good, up-to-date tool, my business would be further along.

So, entering that stuff initially into a CRM system can be a bit tedious, and it will seem a bit unnecessary at first, but if I did it over again, that would be the first thing I’d do differently. Start on day one – not necessarily because it will bring investors in the door right away, but because it’s important to have a system that you have full confidence in when it comes to maximizing the opportunities to have real conversations with people who could become investors.

Finding new investors can be a real grind, and at various times I think the process makes everyone at some point flop dejectedly onto a couch and ask themselves, “What can I be doing differently here?” And while I’m not sure I know the exact answer in every case, I do think that in many cases that answer probably starts with, “Get a real process.” And that means CRM.

And as I’ve mentioned before, now I use Highrise by 37signals as my CRM system. Much better, simpler and cheaper than Salesforce. Probably worth more of a discussion down the road.

2. Combine my blog and my website.

This is a more recent revelation. As background, I have two sites for my business…the main company site at www.islainvest.com and my blog which is hosted at its own domain at www.caleinthekeys.com.

The reason I have two sites is that, basically, I wanted to stay local in picking the firm that designed my website. Alas, at that time (three years ago), they couldn’t quite figure out how to easily integrate the look of a blog with the rest of the site that I wanted. So I just went out and did the blog independent of my firm’s site. And in what may be a prime example of confirmation bias, that separation has made sense to me over the years – because it enabled me to do some things on the blog I probably wouldn’t do on the website. Like bragging about bonefish, for instance.

Turns out, though, that I get a lot more traffic to my blog than I do my main website. For a handful of reasons, my Google juice is higher for the blog. And as I’ve started talking to some SEO guys about a handful of online marketing things I’m considering, they have each in so many ways said the same thing:

My main website would be showing up a lot higher in Google searches if my blog was hosted at www.islainvest.com, instead of being a separate domain. Significantly higher.

There is a lot more to search engine optimization, keywords, backlinks, etc. than I will probably ever know, but this particular combo seems like a no-brainer given that had I done it earlier, (1) I’d have been saving money on hosting just one website instead of two and (2) it would have produced much better results in Google – which would likely have lead to more investors.

So, save money, more investors. Gotta consider that, no?

It’s hard to guesstimate how much of that additional re-directed traffic would have actually resulted in new investors over the years, but I’m pretty sure it would have resulted in more sign-ups for my email list, and as I’ve mentioned before, that has really been my top sales tool. And now, to combine the two, it’s going to cost some bucks.

So, again, with the benefit of hindsight, I’d have done that differently. Plus WordPress templates are pretty amazing these days, so it’s all easy enough to do cheaply right out of the gate.

3. Monthly, not quarterly, billing.

I made this change after my first year, and am thankful for it. I originally launched my Spoke Fund under a quarterly billing plan, meaning FOLIO deducted my fees from client accounts and forwarded them to me four times a year. At the time, a quarterly plan seemed to me to be something that investors might prefer, as it meant that my fees were tied a little closer to the performance of the portfolio. If the value of the portfolio rose that quarter, I’d make more, and if it fell, I’d make less – which is about as close as I could get to charging any kind of easily scalable “performance fees” when it came to non-accredited investors. Also thought quarterly billing would underscore that I wanted my investors to be thinking long-term.

Thing is, nobody cared. Really makes no difference to my investors if I bill them quarterly or monthly – but it can make a helluva difference to your firm in terms of cash flow when starting out. My investors are much more concerned with performance and bips charged than the timing of those fees…which seems obvious in retrospect, but hey, when you’re starting out, ya need all the friends you can get.

So, what seemed like a more investor-friendly billing schedule was really just something I’d over-thought. Better to get paid every month early on.

Comments

One thing I wish I’d done earlier is not waste so much time and energy on spotty marketing and advertising. I was doing a postcard mailing once a year, a couple of seminars(which I paid handsomely for) every few months and then wondering why people weren’t coming through the door.

The absolute best marketing/advertising/prospecting I’ve ever done is simply asking friends, family and clients for one-on-one introductions. It might cost a lunch or cup of coffee, but the return has been terrific. And make sure you’re just yourself, don’t vomit your “elevator speech” all over someone. Ask them what they like about their current situation and what they don’t like. Usually the independent, fee-only, non-TAMP, transparent, spoke-fund setup is exactly what they want (or something close!).

Thanks for sharing these lessons learned. I think I’d start by affirming as strongly as possible your point about getting a CRM package. In fact, I had one when I started, I have a technology background, and I still struggled with the process. My planning practice demands functionality that I might not othwerwise need, such as integration with planning software, and I bounced around a bit before I settled in with my current solution, which is Redtail CRM. I’m not overly thrilled with it, but with minor customization it fits my needs better than the many other options I’ve evaluated, and I’m pretty entrenched at this point.

On a more general technology note, I’ve finally gotten to the point where I’m wholly cloud-based. This has reduced a lot of headaches, and fits my life patterns (i.e. where I work) much better than the way I started. It also just about eliminates dependence on a specific operating system, which is huge. In fairness, the offerings have gotten much better over the last few years, so it’s much easier to do this now, but I wish I had made this a goal from the start.

In terms of specifics, Dropbox and Evernote both allow me to access thoughts and documents from home, work, iPad and iPhone, and they sync instantaneously. It’s hard to imagine living without them.

If I had it all to do over again, I’d be much tighter about my operating procedures, documenting workflows, establishing “golden” versions of document templates, etc. It felt like I was doing a pretty good job of that at the time. Nonetheless, I still feel like I’m reinventing the wheel at times, and as I bring on assistance to run my business I find I’ve got more work than I should to get them up and running. This is definitely more intensive on the planning side of my business than it is for managing investments, but it’s critical in all cases. Note that I don’t mean thinking through every possible operating scenario before launch. Ongoing flexibility is important, but I’m a big fan of using checklists, both in the area of investing criteria and operating steps. In fact, having read The Checklist Manifesto by Atul Gawande prior to launching my business would probably have made my life easier, had it existed at the time.